In a recent blog, The National Taxpayers Union Foundation speculated over potential snags in the United State’s close friendship with Canada over the overreach of the Foreign Account Tax Compliance Act. It appears after just one month since it’s enactment, US-Canadian ties are already being strained.
Since implementation on July 1, 2014, FATCA has cost Canada’s five biggest banks a combined $750 million in Canadian dollars ($687 million in US dollars) just in initial compliance expenses. American-Canadian dual citizens are already fed up.
The Wall Street Journal explains US expatriates are taking legal action against the Canadian government for its role implementing FATCA. The lawsuit challenges that the Canada-US intergovernmental agreement violates provisions in the 1982 Canadian Charter of Rights and Freedoms which guarantees “life, liberty, and security of person; security against unreasonable search and seizure; and equal protection of law without discrimination.”
Additionally, the plaintiffs suggest that FATCA “goes against the principle ‘that Canada will not forfeit its sovereignty to a foreign state.” By forcing Canadian banks to share account information with the IRS via Canadian tax authorities, many would argue FATCA goes against the Canadian principle “that Canada will not forfeit its sovereignty to a foreign state.”
Given that a record, 1,577 US taxpayers gave up their passports or green cards in the first half of 2014, the US needs to ask if FATCA is worth risking our closest ally.